Do I Need Critical Illness Cover?

by | Wednesday 3rd Jan 2024 | Mortgage Insights

What does critical illness insurance cover?

What does critical illness insurance cover?

Life is a journey fraught with unexpected twists and turns, and not all of them bring joy unfortunately. While it’s human nature to avoid dwelling on the negative aspects of our health, the reality is that many of us will face a serious illness at some point in our lives. Unfortunately, for some, the prognosis may be terminal. In the face of such uncertainties, it becomes paramount to consider our ability to plan for the unexpected. Critical illness cover insurance steps into this void, offering a financial safety net with a lump sum pay-out upon the diagnosis of specific conditions. This comprehensive blog post aims to delve deeply into the reasons why securing critical illness coverage and any kind of financial protection is crucial and explores key considerations when making this pivotal decision.

Understanding Critical Illness Cover

Critical illness cover insurance serves as a safeguard, guaranteeing a lump sum pay-out upon the diagnosis of one of approximately 40 specified conditions. While these conditions often relate to terminal diagnoses, some policies extend coverage to debilitating yet less serious ailments. Often colloquially referred to as “cancer cover,” these policies provide a financial cushion during life-altering health challenges.

The Importance of Critical Illness Cover

In an ideal world, we would never need to claim on our insurance policies. However, the peace of mind that comes from knowing there’s a well-thought-out plan in place for potential loss of income or increased treatment costs is invaluable. The flexibility provided by the lump-sum pay-out, which can be used for any purpose, becomes a beacon of financial stability during challenging times. On average, it takes approximately eight weeks for a claim to be settled, contingent on the timely provision of necessary supporting medical evidence by your doctor.

Key Considerations for Critical Illness Insurance:

Qualifying Period:

Most insurers impose a waiting period before coverage takes effect, typically around three months after policy agreement. This precautionary measure aims to protect insurers against individuals seeking coverage in anticipation of an imminent diagnosis.


Choosing the right policy is crucial. While opting for the cheapest option may leave you underinsured, the most expensive policy may offer coverage beyond your needs. Reading the fine print, understanding qualifying conditions, and being aware of exclusions are vital considerations in selecting the most suitable policy. That is why we would always recommend that you secure a policy through a qualified insurance advisor and broker.

Medical History:

Accurate disclosure of your medical history is non-negotiable. Failure to provide complete and truthful information may result in the insurer denying a pay-out if a claim becomes necessary.

Critical Illness Insurance for Professionals and Small Business Owners

For individuals with families, sole breadwinners, the self-employed, or small business owners, critical illness insurance is not just an option but a prudent consideration. While a life insurance policy provides a safety net in the worst-case scenario, a long-term illness affecting earning potential demands additional protection.

Do I Need Critical Illness Cover?

Data from the Association of British Insurers (ABI) underscores the significance of critical illness coverage, with a staggering 92.2% of critical illness claims being paid out. The average pay-out of £68,000 makes a compelling case for individuals to seriously consider this form of insurance, especially in a time when wage growth is modest, and interest rates are low.

Critical Illness Cover Gives Working Professionals Greater Assurance

The high pay-out rate for critical illness policies offers working professionals’ substantial assurance. The primary reason for claim rejections is often non-disclosure, underscoring the importance of accurately detailing medical history during the application process and working with a professional advisor to make sure that all areas are covered. In an era of economic challenges where building substantial savings is not always feasible, having a financial safety net for unforeseen health issues becomes paramount.

How Much Critical Illness Cover Do I Need?

Do I need critical illness insurance?

When considering this form of coverage, it’s crucial to weigh the potential benefits against the policy’s specifics. Your insurance broker will also be able to help you to determine exactly how much cover you will need, based on your income and outgoings. Here is a list of some other considerations:

Coverage Extent:

Understanding the extent of coverage is paramount. Some policies may focus primarily on terminal illnesses, while others may encompass a broader spectrum of critical conditions. Tailoring your coverage to align with your specific health concerns is key.

Policy Flexibility:

Consider the flexibility offered by the policy. Some critical illness insurance policies may provide partial pay-outs for less severe conditions, offering a degree of financial support even in situations that do not meet the criteria for a full pay-out.

Rider Options:

Exploring rider options is also advisable. Some policies allow for additional riders that can enhance coverage, such as covering specific medical treatments, experimental therapies, or even offering a waiver of premium in case of a critical illness diagnosis.

Long-Term Viability:

Assess the long-term viability of the policy. Opting for a policy that allows for renewability or conversion to another form of coverage can be beneficial in ensuring ongoing financial protection as your needs evolve.

What Does Critical Illness Cover?

Critical illness insurance, when seamlessly integrated into your overall financial plan, can be a powerful tool in mitigating the financial impact of unexpected health challenges. Here’s how you can strategically incorporate critical illness coverage into your financial planning:

Assessing Income Replacement Needs:

Evaluate the potential loss of income in the event of a critical illness. Consider how long you may be unable to work and the financial impact on your household. The lump sum pay-out from critical illness insurance can bridge the gap during this period.

Evaluating Existing Health Coverage:

Assess your existing health coverage, including employer-sponsored health insurance or government health programs. Critical illness insurance can complement these coverages by providing additional funds for non-medical expenses, such as mortgage payments, education costs, or other financial obligations.

Aligning Coverage with Lifestyle:

Tailor your critical illness coverage to align with your lifestyle and potential risks. For example, if you have a family history of certain critical illnesses, you may opt for coverage that specifically addresses those concerns.

Considering Tax Implications:

Understand the tax implications of critical illness insurance. In some cases, the lump sum pay-out may be tax-free, providing an additional financial advantage. Consult with a tax professional to maximize the benefits of your coverage.

Periodic Policy Review:

Periodically review your critical illness insurance policy to ensure it continues to align with your evolving needs and circumstances. Life changes, such as marriage, the birth of a child, or changes in employment, may necessitate adjustments to your coverage. Your broker will keep track of your policy and will run through regular reviews with you.

Is Critical Illness Insurance Worth It?

In our opinion, it most definitely is worth it. Or at least looking into your options is. The decision to secure critical illness coverage is not one to be taken lightly. It involves a thorough understanding of personal health risks, financial implications, and the intricacies of various insurance policies. The peace of mind that comes with having a well-structured plan in place for potential health challenges is invaluable. Critical illness insurance serves as a financial safety net, offering a lifeline during times of uncertainty.

Speak To a Critical Illness Cover Broker

As we navigate the complexities of life, embracing the proactive approach of safeguarding our financial well-being against unforeseen health issues becomes a responsible choice. Whether you are a working professional, a small business owner, or a family-oriented individual, critical illness insurance is an essential string to your bow, ready to offer support when you need it most. That’s why you should call our team of insurance advisors today to get the ball rolling. By carefully considering the nuances of critical illness coverage, aligning it with your unique needs, and incorporating it into your broader financial plan, Oportfolio will help you to get the right cover for your circumstances. Call or email our team today to see how we can help you.

We're Here to Help

If you have any questions about UK mortgage news or or anything you’ve read then please get in touch. We’d love to hear from you.

As featured in

Understanding a Volatile Mortgage Market eBook

Download Our eBook

Join our mailing list and receive a link to our latest ebook, Understanding a Volatile Mortgage Market. 23 pages of practical insights to navigate the unpredictable mortgage landscape.

You Will Receive A Link To Your eBook Shortly!